Hey what's up r/StockMarket! Happy Saturday to all of you. I hope everyone on this sub had a really awesome trading week this past week, and are ready for the final trading month of 2019! :)
Here is everything you need to know to get you ready for the trading week beginning December 3rd, 2018.
Fed concerns aren't over for the market yet - (Source)
Trade relations between China and the U.S. overshadow most everything as stocks enter the month of December, but in the week ahead the Fed and U.S. economy come back into play with important Fed testimony and the November employment report.
Fed Chairman Jerome Powell, whokicked off a powerful rally with his comments Wednesday, appears before the Joint Economic Committee of Congress this coming Wednesday to speak on the economy. Powell said the Fed was close to the neutral rate, the level on the benchmark fed funds rate that is neither stimulative nor slowing for the economy.
That comment sparked a rally of more than 600 points in the Dow and, in the market's view, reversed a previous comment from Powell that neutral was far off, meaning the Fed would have to keep hiking interest rates aggressively. The market is now pricing in one hike for December and just one for all of 2019.
"I think the markets may have overemphasized the dovishness of what he's trying to say," said Scott Anderson, chief economist at Bank of the West. "I think [the Fed] is trying to wean the markets off of forward guidance. …They want to give themselves a little flexibility." Anderson said there's risk the first half of 2019 could be weaker, and he does expect the economy to slow just below 2 percent in the second half, in part due to trade wars.
He said Powell's comment makes the Fed's interest rate forecast all the more important when it is released after the next meeting on Dec. 19. The Fed currently has forecast three interest rate hikes for next year, but the market is concerned the economy will not support that many. Powell's comments before Congress in the week ahead are also important, given the fact he was criticized by President Donald Trump for raising interest rates.
"It's kind of dicey politically, I think, and the fact his statement just a month ago was interpreted so hawkishly," said Anderson. Economists expect Powell to state that the Fed is independent and point to the fact that it is dependent on data for rate guidance.
Although the stock market rallied on Powell's statement and bond yields fell, some economists believe the markets misinterpreted the Fed's message. Both J.P. Morgan and Goldman Sachs economistsexpect four rate hikes next year.
The emphasis in the week ahead will also be on any U.S. data that can help steer the Fed. Most important is Friday's employment report, but there are also vehicle sales and ISM manufacturing data Monday.
Economists expect 200,000 jobs were created in November, and wages grew at a pace of 3.1 percent year over year. Vehicle sales will also be important, especially after GM's announced layoffs, and economists are expecting to see sales on an annualized basis at 17.2 million, down from the 17.6 million reported in October.
OPEC meets Thursday, and analysts expect Saudi Arabia and Russia to steer the group to a production cut, with Saudi Arabia bearing most of it. Oil prices fell more than 20 percent in November, their worst month since October 2008.
"Our base scenario is you might get some sort of actual but gradual and not really telegraphed 1 million barrels a day cut," said Citigroup energy analyst Eric Lee.
West Texas Intermediate crude futures lost 22 percent in November and closed down 1 percent Friday at $50.93 per barrel.
Stocks staged a stunning turnaround in the past week, erasing losses for an otherwise rough month of November. The S&P 500 was up 4.8 percent to 2,760 for the week and is now just a point below the key 200-day moving average. The S&P was up 1.8 percent for the month of November.
Stocks rallied on Powell but also on optimism for a trade truce between the U.S. and China when Trump and Chinese President Xi Jinping were to meet Saturday.
"Is the market pricing in a cease-fire?" asked Scott Redler, partner with T3Live.com. He said the market could have gotten ahead of itself, depending on the outcome of the trade meeting between Trump and Xi. "We just had our biggest weekly move since 2011. Is that taking away from the actual event? I think the market has priced in about 75 percent of a cease-fire."
Redler said the next area of resistance is around 2,810, if stocks continue to gain after the weekend meeting.
Stock traders may also be watching the bond market,after the 10-year Treasury yield fell to 2.99, just below the 3 percent level. The yield, which moves opposite price, moved closer to the yield of the 2-year, in a flattening move. With the 2-year at 2.78, the difference was just 21 basis points.
Traders believe that occurs when the market is warning about the strength of the economy. If the yield inverts and the 10-year drops below the 2-year, it is a fairly reliable recession warning.
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This past week saw the following moves in the S&P:
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Major Indices for this past week:
https://i.redd.it/y19ynz4tho121.png
Major Futures Markets as of Friday's close:
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Economic Calendar for the Week Ahead:
https://i.redd.it/6gmghg2vho121.png
Sector Performance WTD, MTD, YTD:
Percentage Changes for the Major Indices, WTD, MTD, QTD, YTD as of Friday's close:
https://i.redd.it/jeaav5twho121.png
S&P Sectors for the Past Week:
https://i.redd.it/bpszvm1yho121.png
Major Indices Pullback/Correction Levels as of Friday's close:
https://i.redd.it/kdocqcb0io121.png
Major Indices Rally Levels as of Friday's close:
https://i.redd.it/4e8iio41io121.png
Most Anticipated Earnings Releases for this week:
https://i.redd.it/vwz4rdz1io121.png
Here are the upcoming IPO's for this week:
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Friday's Stock Analyst Upgrades & Downgrades:
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December Almanac: Top Performing S&P 500 Month
December is the number one S&P 500 month and the second best month on the Dow Jones Industrials since 1950, averaging gains of 1.6% and 1.7% respectively. It's also the top Russell 2000 (1979) month and second best for NASDAQ (1971) and Russell 1000. Rarely does the market fall precipitously in December. When it does it is usually a turning point in the market—near a top or bottom. If the market has experienced fantastic gains leading up to December, stocks can pullback.
Trading in December is holiday inspired and fueled by a buying bias throughout the month. However, the first part of the month tends to be weaker as tax-loss selling and yearend portfolio restructuring begins. Regardless, December is laden with market seasonality and important events.
Small caps tend to start to outperform larger caps near the middle of the month (early January Effect) and our "Free Lunch" strategy is served from the offerings of stocks making new 52-week lows on Triple-Witching Friday. An Almanac Investor Alert will be sent prior to the open on December 24 containing "Free Lunch" stock selections. The "Santa Claus Rally" begins on the open on Christmas Eve day and lasts until the second trading day of 2019. Average S&P 500 gains over this seven trading-day range since 1969 are a respectable 1.3%.
This is the first indicator for the market in the New Year. Years when the Santa Claus Rally (SCR) has failed to materialize are often flat or down. The last six times SCR (the last five trading days of the year and the first two trading days of the New Year) has not occurred were followed by three flat years (1994, 2004 and 2015) and two nasty bear markets (2000 and 2008) and a mild bear that ended in February 2016. As Yale Hirsch's now famous line states, "If Santa Claus should fail to call, bears may come to Broad and Wall."
In the last seventeen midterm years, December's rankings slip modestly to #3 S&P 500 (1.8%) and DJIA (1.5%) and #5 NASDAQ (0.6% since 1974). Small caps, measured by the Russell 2000, also perform well in midterm Decembers. Since 1982, the Russell 2000 has lost ground just twice in nine midterm years in December. The average small cap gain in all nine years is 0.7%. In 2010, Russell 2000 gained 7.8% in December.
Time for Santa?
2018 has been a rocky year with a big dose of volatility, but could a late-year rally be in store for investors? History says it is quite possible. "Although the well-known Santa Claus rally is technically the last five days of the year and the first two of the new year, you can't deny the fact that December tends to bring with it good vibes and stocks gains," explained LPL Senior Market Strategist Ryan Detrick.
As our LPL Chart of the Day shows, since 1950, no month has a higher average return or has been higher more often than the month of December.
With Federal Reserve Chair Jerome Powell opening the door to potentially fewer interest rate hikes in 2019, the last component likely needed for a rally is some type of agreement between the United States and China regarding the ongoing trade issues. Given the G20 summit is this weekend, many are expecting some type of potential resolution to be announced. Stay tuned!
Last, an interesting stat: December has never been the worst month of the year for stocks. That's right—since 1950, the S&P 500 Index has never had its largest monthly drop in December. Given that the worst month this year was October with its 6.9% drop, history would say to not expect a similar big drop to end 2018.
LEI-ding the Way to No Recession
The Conference Board's Leading Economic Index (LEI) is one of our favorite economic indicators. It is designed to predict future movements in the economy based on a composite of 10 economic indicators (like manufacturers' new orders, stock prices, and weekly unemployment claims) whose changes tend to precede shifts in the overall economy. Last week, the LEI painted a continued strong backdrop for future economic growth, as it rose slightly above the previous month and 5.9% year over year (YoY).
Looking under the hood, the LEI has risen or been flat for 29 consecutive months, the longest streak in more than 30 years. While the yield curve, peak earnings, Federal Reserve (Fed) worries, and trade issues with China have been getting all the attention recently, all recessions going back to the early 1970s first saw the LEI turn negative YoY; and because of its solid track record of predicting recessions, the LEI is a component of LPL Research's Five Forecasters.
As our LPL Chart of the Day shows, the LEI is nowhere near turning negative.
"The fact that the LEI has been very successful at forecasting recessions, and is one of the few forward-looking economic indicators, make it one of our favorites. The continued strong data suggest a recession is nowhere in sight and signal solid underlying fundamentals in the U.S. economy," said Ryan Detrick, LPL senior market strategist.
Last, examining all seven recessions going back to early 1970 shows some interesting developments. It turns out the LEI turned negative year over year on average eight months (with a median of six months) before a recession officially occurred. That is what we call a nice track record. Again, with the LEI up 5.8% year over year, we believe we are a long way from this economic indicator flashing any major recession warning.
STOCK MARKET VIDEO: Stock Market Analysis Video for December 3rd, 2018
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STOCK MARKET VIDEO: ShadowTrader Video Weekly 12.2.18
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Here are the most notable companies reporting earnings in this upcoming trading week ahead-
- $LULU
- $MOMO
- $AVGO
- $AZO
- $DG
- $OKTA
- $ULTA
- $KR
- $FIVE
- $COUP
- $DOCU
- $FNSR
- $RH
- $MRVL
- $CLDR
- $RMR
- $AEO
- $BMO
- $SIG
- $HPE
- $TOL
- $ZS
- $MDB
- $THO
- $PLCE
- $GMS
- $HDS
- $OLLI
- $PDCO
- $HQY
- $AOBC
- $MOV
- $SMAR
- $BNED
- $DLTH
- $HOME
- $CONN
- $MIK
- $GIII
- $AVYA
- $BIG
- $FGP
Here are the most notable earnings releases for the trading week beginning December 3rd, 2018.
Below are some of the notable companies coming out with earnings releases this upcoming trading week ahead which includes the date/time of release & consensus estimates courtesy of Earnings Whispers:
Monday 12.3.18 Before Market Open:
Monday 12.3.18 After Market Close:
Tuesday 12.4.18 Before Market Open:
Tuesday 12.4.18 After Market Close:
Wednesday 12.5.18 Before Market Open:
Wednesday 12.5.18 After Market Close:
Thursday 12.6.18 Before Market Open:
Thursday 12.6.18 After Market Close:
Friday 12.7.18 Before Market Open:
Friday 12.7.18 After Market Close:
NONE.
lululemon athletica inc. $132.55
lululemon athletica inc. (LULU) is confirmed to report earnings at approximately 4:05 PM ET on Wednesday, December 5, 2018. The consensus earnings estimate is $0.69 per share on revenue of $733.49 million and the Earnings Whisper ® number is $0.74 per share. Investor sentiment going into the company's earnings release has 91% expecting an earnings beat The company's guidance was for earnings of $0.65 to $0.67 per share on revenue of $720.00 million to $730.00 million. Consensus estimates are for year-over-year earnings growth of 23.21% with revenue increasing by 18.49%. Short interest has increased by 19.7% since the company's last earnings release while the stock has drifted lower by 13.5% from its open following the earnings release to be 11.1% above its 200 day moving average of $119.26. Overall earnings estimates have been revised higher since the company's last earnings release. On Thursday, November 8, 2018 there was some notable buying of 1,982 contracts of the $130.00 put expiring on Friday, December 21, 2018. Option traders are pricing in a 11.2% move on earnings and the stock has averaged a 10.6% move in recent quarters.
Momo Inc. $31.35
Momo Inc. (MOMO) is confirmed to report earnings at approximately 3:30 AM ET on Wednesday, December 5, 2018. The consensus earnings estimate is $0.54 per share on revenue of $536.00 million and the Earnings Whisper ® number is $0.56 per share. Investor sentiment going into the company's earnings release has 89% expecting an earnings beat The company's guidance was for revenue of $525.00 million to $540.00 million. Consensus estimates are for year-over-year earnings growth of 22.73% with revenue increasing by 51.22%. Short interest has decreased by 0.2% since the company's last earnings release while the stock has drifted lower by 26.8% from its open following the earnings release to be 21.8% below its 200 day moving average of $40.07. Overall earnings estimates have been revised lower since the company's last earnings release. On Wednesday, November 28, 2018 there was some notable buying of 3,170 contracts of the $29.50 put expiring on Friday, December 7, 2018. Option traders are pricing in a 13.3% move on earnings and the stock has averaged a 12.6% move in recent quarters.
Broadcom Limited $237.41
Broadcom Limited (AVGO) is confirmed to report earnings at approximately 4:15 PM ET on Thursday, December 6, 2018. The consensus earnings estimate is $5.55 per share on revenue of $5.41 billion and the Earnings Whisper ® number is $5.72 per share. Investor sentiment going into the company's earnings release has 71% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 16.84% with revenue increasing by 11.68%. Short interest has increased by 2.7% since the company's last earnings release while the stock has drifted higher by 5.9% from its open following the earnings release to be 1.0% above its 200 day moving average of $235.13. Overall earnings estimates have been revised higher since the company's last earnings release. On Monday, November 26, 2018 there was some notable buying of 7,500 contracts of the $400.00 call expiring on Friday, June 21, 2019. Option traders are pricing in a 6.1% move on earnings and the stock has averaged a 5.1% move in recent quarters.
AutoZone, Inc. $809.07
AutoZone, Inc. (AZO) is confirmed to report earnings at approximately 6:55 AM ET on Tuesday, December 4, 2018. The consensus earnings estimate is $12.21 per share on revenue of $2.64 billion and the Earnings Whisper ® number is $12.26 per share. Investor sentiment going into the company's earnings release has 58% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 22.59% with revenue increasing by 1.96%. Short interest has increased by 24.9% since the company's last earnings release while the stock has drifted higher by 14.0% from its open following the earnings release to be 15.1% above its 200 day moving average of $702.83. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, November 30, 2018 there was some notable buying of 533 contracts of the $870.00 call expiring on Friday, December 21, 2018. Option traders are pricing in a 6.0% move on earnings and the stock has averaged a 6.6% move in recent quarters.
Dollar General Corporation $110.99
Dollar General Corporation (DG) is confirmed to report earnings at approximately 6:55 AM ET on Tuesday, December 4, 2018. The consensus earnings estimate is $1.26 per share on revenue of $6.39 billion and the Earnings Whisper ® number is $1.28 per share. Investor sentiment going into the company's earnings release has 70% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 28.57% with revenue increasing by 8.24%. Short interest has decreased by 4.3% since the company's last earnings release while the stock has drifted higher by 6.4% from its open following the earnings release to be 9.9% above its 200 day moving average of $101.02. Overall earnings estimates have been revised lower since the company's last earnings release. On Friday, November 16, 2018 there was some notable buying of 2,539 contracts of the $110.00 put expiring on Friday, January 18, 2019. Option traders are pricing in a 8.2% move on earnings and the stock has averaged a 5.0% move in recent quarters.
Okta, Inc. $63.65
Okta, Inc. (OKTA) is confirmed to report earnings at approximately 4:05 PM ET on Wednesday, December 5, 2018. The consensus estimate is for a loss of $0.11 per share on revenue of $96.81 million and the Earnings Whisper ® number is ($0.08) per share. Investor sentiment going into the company's earnings release has 77% expecting an earnings beat The company's guidance was for a loss of $0.12 to $0.11 per share on revenue of $96.00 million to $97.00 million. Consensus estimates are for year-over-year earnings growth of 67.65% with revenue increasing by 41.87%. Short interest has decreased by 14.7% since the company's last earnings release while the stock has drifted lower by 8.1% from its open following the earnings release to be 21.6% above its 200 day moving average of $52.35. Overall earnings estimates have been revised higher since the company's last earnings release. On Tuesday, November 20, 2018 there was some notable buying of 7,287 contracts of the $50.00 call expiring on Friday, December 21, 2018. Option traders are pricing in a 12.6% move on earnings and the stock has averaged a 9.0% move in recent quarters.
ULTA Beauty $297.79
ULTA Beauty (ULTA) is confirmed to report earnings at approximately 4:00 PM ET on Thursday, December 6, 2018. The consensus earnings estimate is $2.16 per share on revenue of $1.56 billion and the Earnings Whisper ® number is $2.20 per share. Investor sentiment going into the company's earnings release has 75% expecting an earnings beat The company's guidance was for earnings of $2.11 to $2.16 per share. Consensus estimates are for year-over-year earnings growth of 27.06% with revenue increasing by 16.23%. Short interest has increased by 51.2% since the company's last earnings release while the stock has drifted higher by 20.5% from its open following the earnings release to be 19.3% above its 200 day moving average of $249.55. Overall earnings estimates have been revised higher since the company's last earnings release. On Thursday, November 15, 2018 there was some notable buying of 1,260 contracts of the $300.00 put expiring on Friday, January 18, 2019. Option traders are pricing in a 7.2% move on earnings and the stock has averaged a 5.2% move in recent quarters.
Kroger Co. $29.66
Kroger Co. (KR) is confirmed to report earnings at approximately 7:30 AM ET on Thursday, December 6, 2018. The consensus earnings estimate is $0.43 per share on revenue of $27.58 billion and the Earnings Whisper ® number is $0.43 per share. Investor sentiment going into the company's earnings release has 60% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 2.27% with revenue decreasing by 0.61%. Short interest has increased by 27.6% since the company's last earnings release while the stock has drifted higher by 3.7% from its open following the earnings release to be 8.0% above its 200 day moving average of $27.47. Overall earnings estimates have been revised lower since the company's last earnings release. On Tuesday, November 13, 2018 there was some notable buying of 3,561 contracts of the $32.00 call expiring on Thursday, April 18, 2019. Option traders are pricing in a 8.0% move on earnings and the stock has averaged a 10.8% move in recent quarters.
Five Below, Inc. $104.79
Five Below, Inc. (FIVE) is confirmed to report earnings at approximately 4:00 PM ET on Wednesday, December 5, 2018. The consensus earnings estimate is $0.19 per share on revenue of $303.54 million and the Earnings Whisper ® number is $0.21 per share. Investor sentiment going into the company's earnings release has 80% expecting an earnings beat The company's guidance was for earnings of $0.17 to $0.19 per share on revenue of $301.00 million to $304.00 million. Consensus estimates are for year-over-year earnings growth of 5.56% with revenue increasing by 18.03%. Short interest has increased by 10.4% since the company's last earnings release while the stock has drifted lower by 21.1% from its open following the earnings release to be 9.5% above its 200 day moving average of $95.66. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, November 28, 2018 there was some notable buying of 513 contracts of the $102.00 call expiring on Friday, December 7, 2018. Option traders are pricing in a 10.3% move on earnings and the stock has averaged a 7.3% move in recent quarters.
Coupa Software $64.43
Coupa Software (COUP) is confirmed to report earnings at approximately 4:05 PM ET on Monday, December 3, 2018. The consensus estimate is for a loss of $0.03 per share on revenue of $62.53 million and the Earnings Whisper ® number is $0.00 per share. Investor sentiment going into the company's earnings release has 70% expecting an earnings beat The company's guidance was for a loss of $0.04 to $0.01 per share on revenue of $62.00 million to $63.00 million. Consensus estimates are for year-over-year earnings growth of 40.00% with revenue increasing by 32.09%. Short interest has increased by 37.6% since the company's last earnings release while the stock has drifted lower by 22.0% from its open following the earnings release to be 8.6% above its 200 day moving average of $59.32. Overall earnings estimates have been revised higher since the company's last earnings release. On Thursday, November 15, 2018 there was some notable buying of 1,265 contracts of the $65.00 put expiring on Friday, January 18, 2019. Option traders are pricing in a 12.0% move on earnings and the stock has averaged a 5.8% move in recent quarters.
DISCUSS!
What are you all watching for in this upcoming trading week ahead? Have a great week to everyone in here on this new week ahead!
Have a fantastic week ahead r/StockMarket!
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